News U Can Use
March 9, 2018
The Week that was…
5
th
March to 9
th
March
2
Indian Economy
• Nikkei India Services Business Activity Index fell to 47.8 in Feb 2018 from 51.7 in Jan 2018,
lowest since Aug 2017. Service activity contracted as rise in prices led to a decline in new
businesses orders. The composite Purchasing Managers’ Index (PMI) also plunged to 49.7 in
Feb 2018 from 52.5 in Jan 2018.
• The Reserve Bank of India (RBI) announced that it will inject Rs. 1 lakh crore short term
money into the banking system ahead of end of financial year that normally sees cash crunch.
The move is likely to keep short term rates under check benefiting borrowing companies. The
central bank will use a combination of appropriate instruments for such fund infusion, while
continuing with its normal liquidity adjustment facility (LAF) operations. RBI will conduct four
variable repo operations of Rs. 25,000 crore each beginning March 6, 2018.
• The government sought Parliament’s approval for additional cash spending of Rs. 85,315.30
crore in the current financial year. Out of this amount, 70% is apportioned to compensate
states for revenue loss because of Goods and Services Tax (GST) roll out. This was the
fourth batch of Supplementary Demands for Grants for FY17-18 in the Lok Sabha.
• The Union cabinet has increased the dearness allowance (DA) to 7% from 5% with effect
from Jan 1, 2018, for its 11 million employees and pensioners. The hike is expected to benefit
approximately 48.41 lakh central government employees and 61.17 lakh pensioners.
3
Indian Equity Market
4
Domestic Equity Market Indices
Indices 9-Mar-18 1 Week Return YTD Return
S&P BSE Sensex 33,307.14 -2.17% -1.50%
Nifty 50 10,226.85 -2.21% -2.00%
S&P BSE Mid-Cap 15,987.27 -2.88% -10.36%
S&P BSE Small-Cap 17,305.92 -4.31% -10.24%
Source: MFI Explorer
NSE Advance/Decline Ratio
Date Advances Declines
Advance/Decline Ratio
05-Mar-18 404 1415 0.29
06-Mar-18 359 1437 0.25
07-Mar-18 264 1562 0.17
08-Mar-18 835 959 0.87
09-Mar-18 689 1101 0.63
Source: NSE
• Indian equity markets closed in the red
amid consistent decline in banking
stocks on reports that chiefs of two
major private banks were summoned
by Serious Fraud Investigation Office,
seeking explanation over loans given
to one of the largest branded jewellery
retailers in connection with a PSU
bank fraud case.
• The announcement of hefty tariffs on
imports of steel and aluminium
products by the U.S. President
negatively impacted the indices amid
weakness in global markets. However,
the same eased later amid media
reports that U.S. President’s import
tariff plan may spare select countries.
• Also, geopolitical tensions eased after
North Korea hinted to stop nuclear and
missile tests which also supported
buying interest.
Ratios
S&P BSE
Sensex
Nifty 50
S&P BSE
Mid Cap
S&P BSE
Small Cap
P/E
22.91 24.97 38.08 111.07
P/B
3.04 3.45 2.74 2.47
Dividend Yield
1.18 1.28 0.91 0.67
Source: BSE, NSE Value as on Mar 9
, 2018
Indian Equity Market (contd.)
5
Sectoral Indices
Indices
Last Returns (in %)
Closing 1-Wk 1-Mth
S&P BSE Auto
24,253.45 -2.28% -3.16%
S&P BSE Bankex
27,347.00 -2.58% -5.32%
S&P BSE CD
21,345.14 1.47% 0.60%
S&P BSE CG
18,464.71 -2.95% -4.03%
S&P BSE FMCG
10,278.73 -2.25% -2.36%
S&P BSE HC
13,449.78 -4.15% -6.26%
S&P BSE IT
12,402.82 -0.30% 2.36%
S&P BSE Metal
13,996.90 -6.87% -7.31%
S&P BSE Oil & Gas
15,052.16 -3.02% -3.15%
Source: Thomson Reuters
Eikon Value as on Mar 9, 2018
• On the BSE sectoral front, S&P BSE Metal
(-6.87%) stood as the major loser followed
by S&P BSE Healthcare (-4.15%).
• S&P BSE Metal fell amid concerns over the
imposition of tariff on steel and aluminium
by the U.S. President. S&P BSE Realty and
S&P BSE Bankex fell 2.61% and 2.58%,
respectively. S&P BSE Consumer Durables
(1.47%) stood as the only gainer.
Indian Derivatives Market Review
• Nifty Mar 2018 Futures were at 10,216.45 points, a discount of 10.40 points below the spot
closing of 10,226.85. The turnover on NSE’s Futures and Options segment stood at Rs. 42.24
lakh crore against Rs. 30.82 lakh crore on Mar 1.
• The Put-Call ratio stood at 0.78 compared with the previous week’s close of 0.80.
• The Nifty Put-Call ratio stood at 1.14 compared with the previous week’s close of 1.29.
Domestic Debt Market
6
Debt Indicators
(%)
Current
Value
1-Wk
Ago
1-Mth
Ago
6-Mth
Ago
Call Rate
5.89 5.91 5.89 5.86
91 Day T-Bill
6.25 6.31 6.39 6.09
7.80% 2021, (5 Yr GOI)
7.22 7.19 7.09 6.44
7.17% 2028, (10 Yr GOI)
7.67 7.74 7.49 --
Source: Thomson Reuters
Eikon
Value as on Mar 9, 2018
• Bond yields fell amid value buying on
expectations that inflation rate would
grow at a slower rate in Feb 2018.
Hopes of improving liquidity conditions
of the economy also added to the
gains.
• However, gains were capped following
the auction of state development loans
of 16 state governments which led to
supply of debt securities in the market.
• Meanwhile RBI announced that it will
infuse one trillion rupees in the
banking system through term repos in
Mar 2018 that ruled out the possibility
of any open market purchase of bonds.
• Yield on the 10-year benchmark paper
(7.17% GS 2028) fell 7 bps to close at
7.67% from the previous week’s close
of 7.74% after trading in a range of
7.63% to 7.80%.
7.62
7.72
7.82
5-Mar 6-Mar 7-Mar 8-Mar 9-Mar
Yield in %
10 -Yr Benchmark Bond ( % )
Source: CCIL
Domestic Debt Market (Spread Analysis)
7
Maturity
G-Sec Yield
(%)
Corporate Yield
(%)
Spread
bps
1 Year 6.69 7.67 98
3 Year 7.34 7.89 55
5 Year 7.61 8.11 50
10 Year 7.95 8.40 45
Source: Thomson Reuters
Eikon Value as on Mar 9, 2018
• Yields on gilt securities fell across the
maturities by up to 9 bps, barring 3-year
paper that expanded 1 bps.
• Corporate bond yields increased across 3
to 15 years’ maturities by up to 3 bps,
barring 9- and 10-year maturities that
closed steady. Yield fell on 1- and 2-year
maturities by 9 bps and 5 bps,
respectively.
• Spread between AAA corporate bond and
gilt contracted by up to 7 bps across 1 to
3 years’ maturities and expanded in the
range of 6 bps to 11 bps across the
remaining segment.
-9
-6
-3
0
6.00
6.80
7.60
8.40
3 Mths 6 Mths 1 Yr 5 Yrs 10 Yrs 20 Yrs 30 Yrs
India Yield Curve Shift (%) (W-o-W)
Change in bps 09-Mar-18 01-Mar-18
Yield in %
Change in bps
Source: Thomson Reuters Eikon
Regulatory Updates in India
8
• The Union cabinet relaxed spectrum holding caps, thereby giving a boost to mergers and
acquisitions and spectrum sale, as carriers try to sell assets, including airwaves, to repay debt.
It has increased the overall airwaves holding limit to 35% from 25%. The government rules
currently bar any merged entity from holding more than 25% of the spectrum allocated in a
service area or circle, and over 50% in a particular band. Also, the cabinet extended the
payments tenure for auctioned airwaves from 12 years, including a two-year moratorium, to 16
years, as a one-time measure. This would give the immense relief to carriers reeling under
debt burden of more than Rs. 7.7 lakh crore.
• RBI further tightened the priority sector lending (PSL) norms for foreign banks. RBI has
directed them to compulsorily create sub-targets so that they lend a portion of their loans to
small and marginal farmers as well as micro enterprises from Apr 2020. RBI however has
provided relief by removing the credit limit, which means all loans given to MSMEs will now
qualify under priority sector lending. The PSL norms mandate foreign banks to lend 40% of
their total loan book to the priority sector, such as agriculture, rural infra, and MSMEs among
others from Apr 2020.
• The government announced that all states shall have to compulsorily implement the national e-
way bill system for intra-state movement of goods by Jun 1, 2018. However, the states may
choose any date before Jun 1. Meanwhile, the Minister of State for Finance also stated that if
the recommendation of the Group of Ministers on Information Technology is approved by the
GST Council during its Mar 10 meeting, the system is expected to become mandatory from Apr
1 for inter-state movement of goods.
Regulatory Updates in India (contd..)
• The Minister of State for Planning stated that under the Direct Benefit Transfer (DBT), after the
sale of fertilizers is made by the retailers to the beneficiaries, the fertilizer subsidy will be
released to the fertilizer companies, instead of beneficiaries. According to the government,
direct transfer of subsidy to beneficiaries has not been introduced as the beneficiaries and their
entitlements are not clearly defined. Also, the minister stated that Niti Ayog has set up a
committee for in depth analysis of the issue and to recommend a model that could be used for
direct transfer of subsidy to the farmers.
• According to the Indian Railways, passengers will not be charged merchant discount rate
(MDR) for booking railway tickets through debit cards for transactions up to Rs. 1 lakh. This
comes with an aim to promote digital and cashless transactions. These transactions include
those made at railway ticketing counters as well as through the website of the Indian Railway
Catering and Tourism Corporation (IRCTC). The department of financial services has
communicated the same to the banks.
9
Global News/Economy
• A report from the Labor Department showed that U.S. non-farm payroll employment surged by
313,000 jobs in Feb 2018 as against an upwardly revised increase of 239,000 jobs (200,000
jobs originally reported) in Jan 2018. Job growth came in higher than market expectations
driven by notable increases in employment in the construction and retail sectors that added
61,000 jobs and 50,300 jobs, respectively.
• According to a latest report by the Institute for Supply Management, U.S. service sector activity
grew at a slightly slower pace to 59.5 in Feb 2018 as compared with 59.9 in Jan 2018. The
slight decrease was due to a slowdown in the pace of job growth and prices index. However,
new orders and business activity witnessed growth.
• The European Central Bank (ECB) kept interest rates and asset purchases unchanged in its
monetary policy review. However, the central bank omitted the mention of its stance that it will
boost the asset purchases if outlook turned less favourable, thereby indicating that it is inching
closer to the exit of its massive stimulus program.
• The Bank of Japan kept its monetary stimulus unchanged in its monetary policy review. With
regards to outlook, Bank of Japan is of the view that Japan's economy is likely to continue its
moderate expansion.
• A report from the Nikkei showed that Japan’s service sector Purchasing Managers’ Index came
in at 51.7 in Feb 2018, down from 51.9 in Jan 2018. Also, the composite index came in at 52.2,
down from 52.8 in Jan.
10
Global Equity Markets
11
Global Indices
Indices
9-Mar-18
1-Week
Return
YTD
Return
Dow Jones
25,335.74 3.25% 2.06%
Nasdaq 100
7,101.18 4.26% 9.06%
FTSE 100
7,224.51 2.19% -5.54%
DAX Index
12,346.68 3.63% -4.08%
Nikkei Average
21,469.20 1.36% -8.67%
Straits Times
3,485.57 0.18% 2.43%
Source: Thomson Reuters Eikon
Value as on Mar 9, 2018
U.S.
• U.S. markets traded higher after the
U.S. Labour Department released a
report showing much stronger than
expected job growth in Feb 2018.
• Buying interest found additional support
from easing geopolitical concerns amid
news U.S. President has agreed to
meet with North Korean leader
regarding denuclearization.
Europe
• European markets too witnessed gains, amid easing geopolitical tensions as the supreme
leader of North Korea offered to halt nuclear missile tests and agreed to meet with U.S.
President through South Korean national security adviser. ECB’s policy decision too
generated positive vibes. ECB dropped its easing bias on asset purchases from its
forward guidance, while leaving the key interest rates unchanged.
Asia
• Asian markets rose with investors cheering positive cues from Wall Street and European
Union. Buying interest found additional support after Bank of Japan kept rates unchanged
and reaffirmed its decision to stick to its ultra-easy policy stance in the coming months.
Global Debt (U.S.)
12
• Yield on the 10-year U.S. Treasury bond
rose 3 bps to close at 2.89% from the
previous week’s close of 2.86%.
• U.S. Treasury prices fell initially after
fear of trade war due to imposition of
tariffs on imported steel and aluminium
eased.
• Prices fell further after U.S. non-farm
payroll employment came better than
market expectations in Feb 2018.
• However, data showing that U.S. trade
deficit grew to a more than 9-year high
in Jan 2018 and slowdown in the growth
rate of average hourly employee
earnings in Feb 2018 restricted the
losses.
2.86
2.87
2.88
2.89
5-Mar 6-Mar 7-Mar 8-Mar 9-Mar
Yield in %
US 10-Year Treasury Yield Movement
Source: Thomson Reuters Eikon
Commodities Market
13
Performance of various commodities
Commodities
Last Closing 1-Week Ago
Brent Crude($/Barrel)
65.28 65.05
Gold ($/Oz)
1,323.64 1,322.17
Gold (Rs/10 gm)
30,369 30,269
Silver ($/Oz)
16.60 16.49
Silver (Rs/Kg)
38,313 38,010
Source: Thomson Reuters
Eikon Value as on Mar 9, 2018
Gold
• Gold prices inched up on political
uncertainty in Europe as the Italian
elections ended in a hung parliament.
However, upbeat U.S. non-farm payroll
data for Feb 2018 and news that U.S.
President has agreed to meet the
supreme North Korean leader capped
the gains.
Crude
• Brent crude prices gained on hopes of
fresh output cuts ahead of a meeting
between oil ministers from the
Organization of the Petroleum Exporting
Countries (OPEC) and U.S. shale firms.
Also, International Energy Agency (IEA)
stated that global oil demand was
expected to grow in the next five years.
Baltic Dry Index
• The Baltic Dry Index fell on the back of
lower capesize and panamax activities.
9.70
10.00
10.30
10.60
10.90
9-Feb-18 23-Feb-18 9-Mar-18
Global Commodity Movement
Gold Spot ($/Oz) Silver Spot ($/Oz) Brent ($/bbl)
Global Commodity Prices
Rebased to 10
Source: Thomson Reuters Eikon
0.35%
0.11%
0.64%
Currencies Markets
14
Movement of Rupee vs Other Currencies
Currency Last Closing 1-Wk Ago
US Dollar
65.08 65.23
Pound Sterling
89.85 89.71
EURO
80.16 79.50
100 JPY
60.97 61.07
Source: RBI Figures in INR , Value as on Mar 9, 2018
Rupee
• The rupee rose against the greenback as
the latter remained under pressure on
concerns of a global trade war after the
U.S. President decided to impose steep
tariffs on imported steel and aluminium.
Euro
• The euro fell against the greenback after
the ECB in its monetary policy review
stated that regional inflation remained
subdued. Upbeat U.S. non-farm payroll
data for Feb 2018 added to the losses.
Pound
• The pound rose against the greenback,
on hopes that Britain would be able to
secure a transition deal with the European
Union.
Yen
• The yen weakened against the greenback
after the Bank of Japan reaffirmed its
decision to stick to its ultra-easy policy
stance in the coming months.
9.90
10.00
10.10
10.20
10.30
10.40
10.50
9-Feb-18 23-Feb-18 9-Mar-18
USD GBP Euro JPY
Source: RBI
Currency Prices ( in terms of INR)
Rebased to 10
Currency Movement
-0.23%
0.17%
0.83%
-0.16%
15
The Week that was…
5
th
March to 9
th
March
The Week that was (Mar 5 – Mar 9)
16
Date Events Present Value Previous Value
Monday,
Mar 5, 2018
• India Nikkei Services PMI (Feb)
47.8 51.7
• U.S. ISM Non-Manufacturing/Services Composite (Feb)
59.5 59.9
• Japan Nikkei Composite PMI (Feb)
52.2 52.8
• Eurozone Retail Sales (YoY) (Jan)
2.3% 2.1%
• China Caixin Composite PMI (Feb)
53.3 53.7
Tuesday,
Mar 6, 2018
• Markit Germany Construction PMI (Feb)
52.7 59.8
• Eurozone Markit Retail PMI (Feb)
52.3 50.8
• U.S. Factory Orders (Jan)
-1.4% 1.8%
Wednesday,
Mar 7, 2018
• Japan Leading Index CI (Jan P)
104.8 107.4
• Eurozone Government Expenditure (QoQ) (4Q)
0.3% 0.4%
• Eurozone Gross Domestic Product (YoY) (4Q F)
2.7% 2.7%
• Japan Gross Domestic Product Annualized (QoQ) (4Q F)
1.6% 0.5%
Thursday,
Mar 8, 2018
• European Central Bank Rate Decision
0.0% 0.0%
• China Trade Balance (Feb)
$33.74b $20.35b
• Japan Eco Watchers Survey Current (Feb)
48.6 49.9
• U.S. Initial Jobless Claims (Mar 3) 231k 210k
Friday,
Mar 9, 2018
• Bank of Japan Rate Decision -1.0% -1.0%
• China Consumer Price Index (YoY) (Feb) 2.9% 1.5%
• U.S. Unemployment Rate (Feb) 4.1% 4.1%
• U.S. Change in non-farm Payrolls (Feb)
313k 239k
17
The Week Ahead
12
th
March to 16
th
March
18
The Week Ahead
Day Event
Monday,
March 12, 2018
• India Consumer Price Index (Feb 18)
• India Index of Industrial Production (Jan 18)
• Japan Machine Tool Orders (YoY) (Feb P)
Tuesday,
March 13, 2018
• U.S. Consumer Price Index (YoY) (Feb)
• Japan Machine Orders (YoY) (Jan)
• Japan Tertiary Industry Index (MoM) (Jan)
Wednesday,
March 14, 2018
• India Wholesale Price Index (Feb 18)
• U.S. Retail Sales Advance (MoM) (Feb)
• China Retail Sales YTD (YoY) (Feb)
• China Industrial Production YTD (YoY) (Feb)
• Eurozone Industrial Production (YoY) (Jan)
• U.S. Business Inventories (Jan)
Thursday,
March 15, 2018
• U.S. Export Price Index (YoY) (Feb)
• U.S. Initial Jobless Claims (Mar 10)
Friday,
March 16, 2018
• U.S. University of Michigan Sentiment (Mar P)
• U.S. Housing Starts (MoM) (Feb)
• U.S. Industrial Production (MoM) (Feb)
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19
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